Flagstar and the banking industry are moving away from LIBOR
The London Interbank Offered Rate, or LIBOR, is a benchmark interest rate for short-term loans between banks. Banks also use it as a reference for determining rates for various lending products, such as mortgages, commercial loans, corporate bonds, and credit cards.

The Financial Conduct Authority (FCA), the U.K. agency that regulates LIBOR, will no longer compel banks to submit rates for LIBOR calculation, which may lead to the end of the global benchmark. This change raises questions about the reliability and sustainability of LIBOR moving forward.

Although the rate may continue to exist into 2023, Flagstar Bank, like many financial institutions, is transitioning away from LIBOR to a different interest rate benchmark.

Flagstar leadership is closely following updates from the FCA and from the U.S.-based Alternative Reference Rates Committee (ARRC), a private/public partnership of entities that have prominent importance in markets affected by LIBOR. Both the Federal Reserve Board of Governors and the Federal Reserve Bank of New York are involved in this working committee, which seeks to ensure a smooth and successful transition to a more robust replacement index.

The FAQs below offer more information about the transition from LIBOR. If you have additional questions about how this change will affect your LIBOR-based commercial loan, contact your Relationship Manager, or email Flagstar’s Interest Rate Risk Group.